Analyst Picks and Pans: Apollo Group, MSC Industrial Direct

What Wall Street analysts are saying about selected stocks in the news Tuesday

Apollo Group Inc. (APOL)

Deutsche Bank raises estimates

Apollo Group Inc. said on June 30 it had strong growth in student enrollments during its fiscal third quarter. Deutsche Bank analyst Paul Ginocchio on June 30 boosted his earnings estimates due to the education provider's confident stance on the current quarter.

"Apollo Group beat consensus on all key metrics," said Ginocchio in a note to investors. Apollo's management said its enrollment trends in the fourth quarter looked similar to the third quarter, "a very bullish statement," Ginocchio added.

The Phoenix-based company, which operates the University of Phoenix, said on Monday that its profit rose 44% in the three months ended May 31, while sales grew nearly 26 percent.

Student enrollments grew 22% to 420,700, while new enrollments were up 23% to 87,500, beating expectations, Ginocchio said. He raised his earnings estimates to $4.19 per share for fiscal 2009 and $5.21 per share for 2010.

MSC Industrial Direct Co, (MSM)

Jefferies & Co. cuts estimates

Manufacturing shutdowns and inventory destocking in the third quarter could weigh on MSC Industrial Direct Co., Jefferies & Co. analyst Yvonne Varano said June 30 as she cut her quarterly and full-year profit estimates for the distributor of maintenance and repair supplies.

Varano cut her third-quarter estimate to 37 cents per share from 40 cents per share on revenue of $342 million, down 25% due to extended manufacturing shutdowns and inventory destocking. She also reduced her fiscal 2009 estimate to $1.86 from $1.95 per share.

Varano said she has taken a more conservative view of fourth quarter revenue "as we believe the manufacturing economy is going to remain at low operating revenues throughout the summer months," she said in a note to investors. However, the Melville, N.Y., company should be well positioned to benefit from improvements in demand with market share gains and other factors, she said.

"This should increase the company's operating leverage to an improving top line," Varano said.

MSC Industrial Direct is scheduled to release its third-quarter results July 2.

Business Exchange

Track and share business topics across the Web.